CORESTATE Capital Holding Company presentation January 2018
Disclaimer This presentation contains forward-looking statements that involve a number of risks and uncertainties. Such statements are based on a number of assumptions, estimates, projections or plans that are inherently subject to significant risks, as well as uncertainties and contingencies that are subject to change. Actual results can differ materially from those anticipated in the forward-looking statements of CORESTATE Capital Holding S.A. (the Company ) as a result of a variety of factors, many of which are beyond the control of the Company, including those set forth from time to time in the Company s press releases and reports and those set forth from time to time in the Company s analyst calls and discussions. The Company does not assume any obligation to update the forward-looking statements contained in this presentation. This presentation does not constitute an offer to sell or a solicitation or offer to buy any securities of the Company, and no part of this presentation shall form the basis of or may be relied upon in connection with any offer or commitment whatsoever. This presentation is being presented solely for information purposes and is subject to change without notice. All information on Q3 2017 is unaudited. Glossary: = Euro; $ = (US)Dollar; (F)Y = (financial) year(s); M = month(s); % = percentage; a = actual; acc. = according; adj. = adjusted; approx. = approximately; e = expected; k = thousand(s); m = million(s); bn = billion(s) Page 2 CORESTATE Capital Holding S.A.
Agenda 1 Business model and investment highlights 2 Financial and operating performance 3 Update on corporate acquisitions and outlook Page 3 CORESTATE Capital Holding S.A.
CORESTATE at a glance A leading real estate investment manager Assets under management (AuM) of approx. 22bn (1) with efficient balance sheet structures Diversified offering across all relevant asset and risk types (residential, office, retail, student housing, microliving) Matching needs of different investor types (institutional, family office and retail) Tangible pipeline of 5.7bn reflects strong sourcing capabilities for organic growth Extensive local and international footprint Mainoffices Secondary offices ATOS Madrid London Essen Solingen Hanover Zurich Hamburg Berlin Magdeburg Leipzig Dusseldorf Gera Dresden Luxembourg(HQ) Koblenz NeuIsenburg Frankfurt Nuremberg Stuttgart Augsburg Ulm Munich Pullach Vienna Baar Wollerau Accretive growth strategy in a fragmented market from a solid base in Germany Singapore Guidance 2018 (2) Agg. revenues > 230m Adj. EBITDA > 155m Adj. net income > 120m More than 530 FTEs in 41 offices in 6 countries with direct access to local real estate markets (1) The key figures of the Hannover Leasing Group (HL), Helvetic Financial Services AG (HFS) and ATOS have already been taken into account in the corporate figures of the CORESTATE Group on this page. (2) Adjusted for one-off items (i.e. M&A transaction-related expenses, etc.); gross debt defined as the sum of financial liabilities to banks and shareholders; net debt defined as gross debt minus cash & cash equivalents (incl. restricted cash) Page 4 CORESTATE Capital Holding S.A.
A fully integrated real estate investment manager Institutional clients Including pension funds, insurance companies Semi-institutional clients Including UHNW, family offices Real estate equity Real estate debt Established in 2006 Residential, high street, micro-living Strong sourcing network Established in 2006 Office Well known asset manager Established in 1981 Core office Long track record Established in 2009 Real estate debt Market leader in German-speaking region (DACH) Best-in-class sourcing platform with long track record throughout all risk and asset classes providing stable fee income Covering the real estate investment lifecycle Phase 1 Deal structuring / acquisition Phase 2 Holding period Phase 3 Exit / realization Transaction-related fees Asset management fees Exit / success-based fees Page 5 CORESTATE Capital Holding S.A.
CORESTATE has reached critical size in terms of AuM Overview of selected European listed alternative and real estate investment managers Comments AuM ( bn) 9 49 Market capitalisation (1) ( bn) 58 15.4 EBITDA 2017e (2) ( m) 591 Sufficiently large AuM facilitating broad market coverage, diversification and comprehensive solutions for institutional clients (3) 3 28 24 2 30 27 1.8 3.4 81 192 Market capitalisation exceeding 1bn providing attractive acquisition currency and potential to significantly increase trading liquidity 2 16 10 12 6 22 1.0 118 2.2 na (mid-point guidance) Considering only real estate, CORESTATE already amongst largest listed managers in Europe 4 4 0.2 36 (4) (5) 3 3 0.7 98 Real estate Diversified alternative assets Source: Company information. (1) Factset as of 29 November 2017. FX rates as of 29 November 2017 (2) Factset as of 29 November 2017; management guidance for CORESTATE (3) The numbers do not include the announced acquisition of Rockspring Property Investment Managers LLP (4) Company information (5) DIC Asset runs hybrid model, i.e. 1.7bn own portfolio, 1.3bn funds and 0.4bn other investments as of 30 June 2017 Page 6 CORESTATE Capital Holding S.A.
Ample room for growth in European sector landscape acquisition opportunities for CORESTATE High degree of fragmentation providing consolidation opportunities (1) Number of asset managers by size 47 20 3 6 23 > 30bn 10-30bn < 10bn Real estate managers Concentration of real estate AuM by top 5 managers (2) Top 5 Managers 16% 94 Average AuM ( bn) Comments The European real estate asset management market is fragmented there are over 90 asset managers with AuM below 10bn (1) Financial institutions are refocusing on their core business and are considering the sale of non-strategic assets High and rising regulatory costs impose a meaningful burden on smaller asset managers that lack scale Client demand and market requirements are becoming increasingly sophisticated, giving larger asset managers a competitive edge Rest 84% (3) (1) Property Funds Research and Institutional Real Estate Inc., Global Investment Managers 2016 (2) Includes short-term, intermediate-term, long-term, multisector, high-yield, bank-loan and retirement-income categories Page 7 CORESTATE Capital Holding S.A.
Investment highlights 1 Fully integrated real estate investment manager with 22bn (1) AuM and diversified product offering 2 Strong recurring fee income streams (approx. 85%) provide stability 3 Unique sourcing capabilities with 5.7bn pipeline drive superior organic AuM growth 4 Diversified investor base with growing allocation to real estate provides sustainable fundraising base 5 Accretive external growth opportunities from sector consolidation based on a scalable platform 6 Strong profitability, efficient balance sheet structures and attractive dividend capacity (1) Including HFS, HL and ATOS. Total AuM as per year-end 2017 Page 8 CORESTATE Capital Holding S.A.
Agenda 1 2 3 Business model and investment highlights Financial and operating performance Update on corporate acquisitions and outlook Page 9 CORESTATE Capital Holding S.A.
Key events of Q3 2017 Financial performance Confirmation of guidance 2017 and increase of guidance 2018 9-months adjusted net profit amounts to 62m (1) 71% of mid-point adjusted net profit guidance for FY2017 already achieved Integration Progress on turnaround of HL Achieved 4.6m profit in Q3 2017 Highest profit since almost a decade External growth Continued growth through bolt-on acquisition Strengthens asset management expertise and footprint for commercial properties Highly accretive acquisition at 5x earnings multiple Credit Rating First time credit rating of BB+ / stable from S&P Unique access to debt capital markets to reduce financing costs, support warehousing and enable continuous growth Enhanced stock profile Uplisting to Prime Standard of Deutsche Börse (segment with highest transparency) Completed on 2 November 2017 Increases investability of the CORESTATE stock supported by higher free float of >40% (2) Convertible bond Successful inaugural issuance of a 200m convertible bond and refinancing of acquisition bond Diversification of funding sources and reduction of cost of capital (1) Including HFS Coupon Participation Fee (CPF) for 9 months, that has been recognized in October 2017 (2) Including management shares Page 10 CORESTATE Capital Holding S.A.
Key financials 9M 2017 Aggregate revenues (1) ( m) 123.7 Adjusted EBITDA (2) ( m) Adjusted net income (2) ( m) 3.1x 40.3 CP F 79.5 39.6 83.4 14.5 5.5x 40.3 39.2 CP F 12.2 5.1x 62.3 35.4 26.9 CP F 9M 2016 9M 2017 9M 2016 9M 2017 9M 2016 9M 2017 CPF: HFS coupon participation fee booked in October 2017 P&L figures include three quarters CORESTATE and approx. one quarter HFS and HL (1) Include revenue from acquisition related fees, asset and property management, realised promote fees, share of profit and loss from associates and joint ventures, and total income from real estate operations / warehousing. (2) Adjusted for one-off items (i.e. M&A transaction-related expenses, etc.). Page 11 CORESTATE Capital Holding S.A.
Fully integrated investment manager with diversified product offering AuM breakdown by asset type (2017) Infrastructure Aviation Media Other RE (1) Micro-living 6% 3% 6% High street 3% Other (2) 15% 13% 3% AuM 22bn 22% 30% Residential Office Comments Clear focus on real estate Broad range of asset classes providing flexibility and diversification Media, Infrastructure and Other types are non-strategic assets in run-off mode after acquisition of Hannover Leasing AuM breakdown by capital type (2017) Comments Debt / mezzanine 23% AuM 22bn Provide broader product offering and capture broader portfolio allocation Cross-selling opportunities 77% Equity (1) Other real estate include among others educational facilities, data centres, mixed-use assets (2) Other include ships, life insurance, solar Page 12 CORESTATE Capital Holding S.A.
Strong pipeline provides visibility on near-term organic growth CORESTATE deal sourcing pipeline Large and diversified pipeline Particular importance of pipeline for growth in current market environment Unique sourcing capabilities grown over the past 10 years Q3 2017 5.7bn In exclusivity 12% In LOI / due diligence 15% Intergroup synergies lead to high percentage of off-market transactions In-depth footprint in DACH region with increased focus on European countries Creation of a broad platform from opportunistic to core Long-standing trackrecord and sourcing competence in secondary markets Under review / identified 73% Additional sourcing potential from future cross-selling effects with HFS, HL and Atos Page 13 CORESTATE Capital Holding S.A.
Examples of new products and recent transactions 1 Hannover Leasing open-ended residential property special AIF with at least 300m equity Target volume of at least 300m HL mandated as the investment management company Focused on newly built residential property in metropolitan areas in Germany Annual payout rate of at least 4% 2 Innovative product offering acquisition of micro-living project in Vienna Acquired from UBM Development AG in a forward funding" deal structure 131 fully furnished micro apartments and extensive services Completion planned in spring 2019 Club deal with UHNWI and family offices 3 CORESTATE real estate expertise acquisition of former headquarter of perfume brand 4711 in Cologne Redevelopment of office asset into apartment hotel project Projected market value at completion of 60m Located in the district of Ehrenfeld, with direct access to shopping amenities, restaurants and bars, a gym, and excellent access to public transportation Part of a new product line of boarding houses (6 club deals with approx. 450m) CORESTATE will develop further projects (strong pipeline) Page 14 CORESTATE Capital Holding S.A.
Agenda 1 Business model and investment highlights 2 Financial and operating performance 3 Update on corporate acquisitions and outlook Page 15 CORESTATE Capital Holding S.A.
Integration of key shared services well on track Completion Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Comments Sales / Investment / AM HR Finance / Accounting Infrastructure & Applications SAP Sales / Investment / AM HR Finance / Accounting Infrastructure & Applications SAP Sales / Investment / AM HR 100% 100% 100% 70% 100% 100% 95% 100% 70% 100% 50% 65% SAP implementation completed in all subsidiaries except ATOS (completion in Q1 2018) Group-wide equity raising with Key Account system across multiple brands Functional setup of investment teams by asset classes First reduction of IT applications and integration of Group accounting (Tagetik) New cash management system (Reval) goes live in Jan 18 Finance / Accounting Infrastructure & Applications SAP 60% 50% 80% Today Page 16 CORESTATE Capital Holding S.A.
Hannover Leasing back to profitability in Q3 2017 Successful turnaround cost reduction executed and focus on future growth Results from ordinary operations (in m).400 4.600 (23.700) (28.900) (11.300) (22.400) (17.800) 2011 2012 2013 2014 2015 2016 3rd Quarter 2017 Turnaround includes Successful closing of club deals (The Cloud, Amsterdam), fund exits (Colosseo) and launch of new retail funds (Denkmal Münster, Leonardo Ulm) FTEs reduced from 131 down to 90 (1) Considering only the 3 rd Quarter 2017; i.e. not year to date Page 17 CORESTATE Capital Holding S.A.
2017 guidance well on track Management confirms FY2017 outlook 170-180 (1,2) 40.3 123.7 Agg. Revenues ( m) 48.6 34.8 71% achieved per September 2017 H1 2017 Q3 2017 HFS CPF October 2017 Total Guidance 2017E (3) Adj. EBITDA ( m) 26.0 13.2 40.3 79.5 115-120 (1,2) Adj. Net Income ( m) 22.8 4.1 35.4 62.3 85-90 (1,2) Notes: (1) Adjusted for one-off items (i.e. M&A transaction-related expenses, etc.); gross debt defined as the sum of financial liabilities to banks and shareholders; net debt defined as gross debt minus cash & cash equivalents (incl. restricted cash) (2) Post acquisition of Hannover Leasing and Helvetic Financial Services, which are consolidated from Q3 2017 onwards (3) HFS Coupon Participation Fee, which has been booked in Q4 2017 Page 18 CORESTATE Capital Holding S.A.
Guidance for 2017 and 2018 M&A and cost synergies as driver for guidance uplift Agg. revenues ( m) Adj. EBITDA ( m) 170-180 (2) >230 115-120 (1,2) >155 80-82 42-43 (1) 2017e guidance pre acquisitions 2017e guidance post acquisitions 2018e guidance as of Nov-17 2017e guidance preacquisitions 2017e guidance postacquisitions 2018e guidance as of Nov-17 Adj. net income Comments ( m) 36-37 (1) 85 90 (1,2) >120 Growing revenues with high share of recurring income, strong margins and capital-light business model (= high cash conversion) creating basis for attractive cash returns Dividends: target payout ratio of 50% 2017e guidance preacquisitions 2017e guidance postacquisitions 2018e guidance as of Nov-17 (1) Adjusted for one-off items (i.e. M&A transaction-related expenses, etc.); gross debt defined as the sum of financial liabilities to banks and shareholders; net debt defined as gross debt minus cash & cash equivalents (incl. restricted cash) (2) Post acquisition of Hannover Leasing and Helvetic Financial Services, which are consolidated from Q3 2017 onwards Page 19 CORESTATE Capital Holding S.A.
Appendix
Profit & Loss statement 9M 2017 1 2 3 4 5 ( m) unaudited 01.01.2017 30.09.2017 unaudited 01.01.2016 30.09.2016 Revenue from Acquisition Related Fees 13.7 5.5 Revenue from Asset and Property Management 31.9 17.7 Revenue from Promote Fees realised 14.1 6.1 Revenue from Real Estate Investment Management 59.7 29.2 Management expenses (32.3) (19.0) Earnings from Real Estate Investment Management 27.5 10.3 Net Rental Income 4.8 0.4 Revenue from Service Charges 0.8 94 Net Gain from Selling Property Holding Companies 13.0 8.5 Total Income from real estate Operations / Warehousing 18.6 9.1 Expenses from real estate Operations / Warehousing (2.6) (0.3) Earnings from Real Estate Operations / Warehousing 16.0 8.8 Earnings from Alignment Capital 4.4 1.0 General, Administrative and Other Expenses (21.2) (5.6) EBITDA 27.3 14.5 Depreciation and Amortisation (3.1) (0.2) EBIT 24.2 14.3 Net Financial Expenses (9.1) (2.5) EBT 15.1 11.7 Income Tax Expenses 1.6 (0.9) Net Profit for the Period 16.6 10.8 Minority interests (0.5) Adjustments 10.8 1.4 Adjusted Net Profit for the Period 26.9 12.2 Trading update (HFS Coupon Participation Fee) 35.4 Adjusted Net Profit for the Period incl. trading update 62.3 In % of mid-point Guidance 2017 71% Comments 1. Strong increase in Revenues from Real Estate Investment Management providing an attractive and stable source of recurring revenues 2. Showing a recurring income from sale of Warehousing Assets 3. Increase of G&A and Other Expenses is mainly driven by business combination of HL and HFS as well as one-off acquisition related expenses 4. Net financial expenses increase mainly due to the acquisition financing of HFS 5. Adjusted Net Profit including trading update fully on track with the 2017 Guidance HFS Coupon Participation Fee of 35.4 m has been booked in October 2017 and is not included in Q3 2017 financials Page 21 CORESTATE Capital Holding S.A.
Balance Sheet 30 September 2017 1 2 3 4 5 ( m) Non-Current Assets unaudited 30.09.2017 audited 31.12.2016 Goodwill 520.4 - Intangible Assets 150.7 0.9 Investment in Associates and Joint Ventures 105.6 35.7 Other Non-Current Assets 175.9 8.3 Total Non-Current Assets 952.7 44.9 Current Assets Inventories 109.6 15.9 Receivables 80.3 16.1 Other Current Assets 27.4 5.4 Cash and Cash Equivalents 104.4 48.2 Total Current Assets 321.7 85.6 Total Assets 1,274.4 130.6 Equity Total Equity 492.3 86.4 Non-Current Liabilities Long-term Financial Liabilities 171.7 14.1 Acquisition Financing HFS 168.9 - Other Non-Current Liabilities 112.8 9.8 Total Non-Current Liabilities 453.4 23.9 Current Liabilities Short-term Financial Liabilities 105.8 4.0 Other Short-term Provisions 45.5 - Short-term Liabilities to Shareholders 39.0 - Other Current Liabilities 138.3 16.2 Total Current Liabilities 328.6 20.2 Total Equity and Liabilities 1,274.4 130.6 Comments 1. Goodwill for the acquisition of HFS and HL 2. Other Non-Current Assets mainly contain loans to third parties as well as financial instruments held for sale 3. Total Equity increase based on the acquisition of HFS partially paid with shares in kind 4. Financial debt to finance HFS acquisition 5. Other Current Liabilities primarily include the trading update, liabilities regarding a new project in Dusseldorf and other Page 22 CORESTATE Capital Holding S.A.
Continued event-driven share price outperformance Share price performance 2017 (1) in % Shareholder structure 300 250 200 8 May. 2017: Increase of 2017E earnings guidance to 36-37m 1 Jul. 2017: Announcement HFS acquisition Increase of 2017E earnings guidance to 85-90m Closing HL acquisition 20 Sep. 2017: Share placement of 157m by Flygon and other. Increased free float 1 Nov. 2017: Uplisting to Prime Standard 130% Norbert Ketterer 9.64% Sandra Ketterer 8,93% Free Float 38.95% 150 16 Dec. 2016: Announcement HL acquisition 5 Jul. 2017: Closing HFS acquisition c. 345m capital increase (2) 21 Nov. 2017: 200m convertible bond successfully placed +22% M. Graf zu Hoensbroech 9.76% 100 23 Feb. 2017: c. 23m capital increase 6 Oct. 2017: ATOS Group Closing Ralph Winter 28.03% Management 4.69% 50 Total number of shares: 21,294,123 Shares are listed in the Prime Standard of Frankfurt Stock Exchange CORESTATE (CCAP) SDAX (SDXK, price index) Source: Factset and company information (1) Re-based to starting value of 100%, share price data from 30 December 2016 to 29 December 2017 (2) Based on 01 October, 2017 CCAP closing price of 47 per share issued against contribution in kind of all of the shares in Helvetic Financial Services Page 23 CORESTATE Capital Holding S.A.
Financial Calendar 2018 Mar 13, 2018 Publication annual financial report 2017 Apr 27, 2018 May 15, 2018 Aug 14, 2018 Sep 06, 2018 Nov 13, 2018 Annual General Meeting Publication Q1 financial report Publication H1 financial report Capital Markets Day Publication Q3 financial report Investor Contact Please note that these dates could be subject to change CORESTATE Capital Holding S.A. CORESTATE Capital Group 4, rue Jean Monnet L-2180 Luxembourg corestate-capital.com Investor Relations Dr. Kai G. Klinger Phone: +49 69 3535630-107 Kai.Klinger@corestate-capital.com Alexander Groschke Phone: +49 69 3535630-106 Alexander.Groschke@corestate-capital.com